Should joint costs be considered in a sell-or-process-further de

Should joint costs be considered in a sell-or-process-further decision? Explain.

Mar 07 2013 05:09 AM

1 Approved Answer

Disha K
answered on December 16, 2013

3 Ratings,
(9
Votes)

<p>When two or more products are manufactured simultaneously from the same input by a joint process, these products are called as joint products. Joint Costs is used to define all production costs spent before the point where joint products are identified as individual products i.e. before split-off point. The company usually have the option to sell the product at split-off point or process them further for higher revenue. For this type of...

sion, joint costs are regarded as irrelevant because joint costs have already been incurred at the time of decision and therefore are sunk costs. The decision to process further or sell is dependent on additional revenue as compared to additional costs incurred because of further processing.</p>

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